How did you get involved in property?
I started as a real estate salesman in January 1993 and learned a lot. It was also in 1993 that I was introduced to the Jan Somers books and IP videos. The office I worked in also had the very early version of the
Somer's PIA software. Although it couldn't do everything it does now in the way of charts etc, the numbers were still the same and it was easy to see that it should be easy to hold a number of properties. Unfortunately, we couldn't (and didn't) see a lot of growth coming for quite some time.
What is your property investment philosophy (CF, CG, renos, houses, flats, buy and hold, develop, flip, wrap, etc)?
Almost all of the above. I've done them all except for the wraps.
What is your IP / property story so far?
We bought our first home here in Ulverstone, Tasmania, in February 1991 for $57,000. It was an older Federation home and cold so, having moved from Queensland, we needed a warmer home.
I knew nothing about IP's at the time but went to the bank and borrowed almost the full amount for another house. I asked for a revaluation on the first home and convinced them it was worth more than it was. We kept the
first one and moved into the second one in late 1992 for $80,000. We were there 18 months when we needed a bigger house so bought our current PPOR in mid 1994 and kept the second one as well.
The mid to late 1990's was tough in the IP world for us. I saw a lot of good houses selling in the $60,000 - $80,000 price range that had been really nicely renovated and rejuvenated etc. Unfortunately there was just way to much negativity about Tasmania and property at the time so, why buy any more? I'd also tried to sell the two we had but couldn't.
In early 2002 things I had the opportunity of selling both IPs and I did.
This was of course right as the boom was hitting Tassie. We sold the first one for $72K and the second one for $77K, less than we'd payed for it 10 years earlier. It resold 6 months later for $123K and each would now be worth around the $200K. One easy lesson on how to throw away well over $200K in equity.
It took me nearly two years to stop thinking about it every day or so. Working in real estate, I was constantly reminded of it. An expensive lesson and one I'll never forget.
In early 2003 I was asked to appraise 7 strata titled units. I told the owners to sell them individually, as they'd get much more for them that way. They wanted to sell the whole lot and didn't want the bother of selling them separately. A week later I saw 2 of them advertised SEPERATELY with another agent.
Good! No conflict of interest! I approached the owner with an offer to buy the lot.
As I had limited equity at the time and would never have considered buying them all as we'd never get the finance, myself and the other three salespeople in my office and our spouses bought the lot for $690K. It doesn't seem much now but back then I'd never sold a house over $300K and it was one of the biggest sales in town. We thought if we could make $20K each couple, we'd be happy. The boom came upon us and we sold all 7 of them over the next 18 months for around 1.1mil, a tidy profit of $100K per couple before tax. We also bought a house and reno'ed it with the four of us too.
Since then my wife and I bought a block of 5 units and are in the DRAWN out process of having them stratum titled. That alone will increase their value by more than 50%. I also did another small reno last year with a friend and
recently bought a couple of blocks to build units on with the same friend.[/FONT]
Is there a story of a really good IP that you would be prepared to share with us?
Our most successful IP story will be the block of 5 units if we ever get them stratum titled as that will be a huge gain for very little effort.
Is there a story of a really bad (or not so good) IP that you would be prepared to share with us?
This would have to be selling the 2 houses we'd held for 10 years and selling right before the boom of 2002 - 2003.
Do you invest in other asset classes (shares, commodities, businesses, managed funds, cash, forex, etc)?
Apart from property, our only other investment class is direct investment in shares. I've had an interest in shares for about 20 years but didn't really do anything much until Telstra. We did ok with T1 and also with T2. Over the past 2 years we've built up a bit of a share portfolio and also 2 years ago started a self managed super fund. That's also going quite well now after a bit of a rocky start.
I like the liquidity of shares and use it as a buffer. I'm not a trader but like to look at fundamentals and hold long term, sometimes TOO long.
What criteria do you use when selecting a property to purchase?
I look for property I can add value too, whether it's doing a reno, developing or strata titling. Although I've looked into buying in Melbourne and considered SW Queensland, I'm more comfortable with my own backyard as I know it and know value here when I see it (or, at least I think I do!).
What structure do you use for your investing?
To date we've bought everything in joint names between my wife and myself. I know I should do something about a trust but haven't.
Do you feel your involvement in the industry has been a help or a hindrance to your investing?
Initially my involvement in the industry was a hindrance because I was such a know-it-all. Although history shows property has always increased, I started believing that it never would in Tassie. Hence selling when I shouldn't have.
Also, being an agent, we have to be very aware of conflict-of-interest issues. I always try and buy off other agents or private sales. The problem with that is, I'm highly unlikely to be at the top of their buyers list if a good buy comes up as they're operating in competition to me.
Thanks to reading Jan's latest book 3 years ago and also Peter Spann and more recently Michael Yardney, I've learned a whole lot more. Not to mention the discovery of Somersoft here 2 ? years ago.
If a budding property investor asked "what are the top things I should do", you would say?
Read Jan's book along with Peter Spann and Michael Yardney and as many other books as you can.
Do your research, there's always an opportunity out there. Don't be in a hurry to buy, as has been said here many times before, the opportunity of a lifetime comes around about once a week.
Get a property savvy accountant.
And if that same budding investor asked "what things should I avoid", you would say?
Avoid selling unless absolutely necessary. (The best timeframe to hold is forever - Warren Buffett)
Avoid well-meaning naysayers. I listened to them and it's been costly. Having said that, don't blindly buy anything either.
How important is planning to being a successful investor?
I was an accidental investor. Planning is something I've only learned in the past few years. If I had of planned from the beginning we'd be a long way ahead of where we are now.
Do you feel joint ventures can be a beneficial way to grow your portfolio?
Joint ventures have worked for us so far although I'd be very careful about who I go into partnership with. It would be better to do nothing than to get into a partnership with the wrong people. The ground rules and the time in the investment have to be agreed upon before you buy anything. I've only done joint ventures with a 'get in, then get out' type of deal.
Do you consider that there is any natural progression for an investor? (eg. From owning a few properties, to owning many, to being a developer)
For us, we're still building our portfolio and have moved to reno'ing and developing on a small scale to start with.
Do you have any thoughts on the CF vs CG debate or on the issue of metro vs regional, units vs houses?
My opinion is that capital growth is best but you need the cashflow to fund it so it's a mixture of both.
What do you prefer, fixed or floating interest rates and why?
I like mainly fixed rates because it gives security in knowing what my repayments are going to be for the next 5 or so years. A small percentage of variable loans is ok as those loans have a bit of flexibility.
Finally, where do you see the market at the moment and do you think the current environment is making it harder for newer investors than when you started?
I can only comment on North-West Tasmania.
We're getting a lot of interstate buyers here, especially from WA. They're coming here to get away from the heat, from the crowds and to enjoy a great lifestyle. It's also more affordable here. Mining on the West Coast is set
to boom and we're getting a lot of mainland miners coming here because the cooler climate is a lot easier to work in. That will have a large flow on effect.
These comments are only my own observations and opinions.
Comments and questions: http://www.somersoft.com/forums/showthread.php?p=292279#post292279
I started as a real estate salesman in January 1993 and learned a lot. It was also in 1993 that I was introduced to the Jan Somers books and IP videos. The office I worked in also had the very early version of the
Somer's PIA software. Although it couldn't do everything it does now in the way of charts etc, the numbers were still the same and it was easy to see that it should be easy to hold a number of properties. Unfortunately, we couldn't (and didn't) see a lot of growth coming for quite some time.
What is your property investment philosophy (CF, CG, renos, houses, flats, buy and hold, develop, flip, wrap, etc)?
Almost all of the above. I've done them all except for the wraps.
What is your IP / property story so far?
We bought our first home here in Ulverstone, Tasmania, in February 1991 for $57,000. It was an older Federation home and cold so, having moved from Queensland, we needed a warmer home.
I knew nothing about IP's at the time but went to the bank and borrowed almost the full amount for another house. I asked for a revaluation on the first home and convinced them it was worth more than it was. We kept the
first one and moved into the second one in late 1992 for $80,000. We were there 18 months when we needed a bigger house so bought our current PPOR in mid 1994 and kept the second one as well.
The mid to late 1990's was tough in the IP world for us. I saw a lot of good houses selling in the $60,000 - $80,000 price range that had been really nicely renovated and rejuvenated etc. Unfortunately there was just way to much negativity about Tasmania and property at the time so, why buy any more? I'd also tried to sell the two we had but couldn't.
In early 2002 things I had the opportunity of selling both IPs and I did.
This was of course right as the boom was hitting Tassie. We sold the first one for $72K and the second one for $77K, less than we'd payed for it 10 years earlier. It resold 6 months later for $123K and each would now be worth around the $200K. One easy lesson on how to throw away well over $200K in equity.It took me nearly two years to stop thinking about it every day or so. Working in real estate, I was constantly reminded of it. An expensive lesson and one I'll never forget.
In early 2003 I was asked to appraise 7 strata titled units. I told the owners to sell them individually, as they'd get much more for them that way. They wanted to sell the whole lot and didn't want the bother of selling them separately. A week later I saw 2 of them advertised SEPERATELY with another agent.
Good! No conflict of interest! I approached the owner with an offer to buy the lot.
As I had limited equity at the time and would never have considered buying them all as we'd never get the finance, myself and the other three salespeople in my office and our spouses bought the lot for $690K. It doesn't seem much now but back then I'd never sold a house over $300K and it was one of the biggest sales in town. We thought if we could make $20K each couple, we'd be happy. The boom came upon us and we sold all 7 of them over the next 18 months for around 1.1mil, a tidy profit of $100K per couple before tax. We also bought a house and reno'ed it with the four of us too.
Since then my wife and I bought a block of 5 units and are in the DRAWN out process of having them stratum titled. That alone will increase their value by more than 50%. I also did another small reno last year with a friend and
recently bought a couple of blocks to build units on with the same friend.[/FONT]
Is there a story of a really good IP that you would be prepared to share with us?
Our most successful IP story will be the block of 5 units if we ever get them stratum titled as that will be a huge gain for very little effort.
Is there a story of a really bad (or not so good) IP that you would be prepared to share with us?
This would have to be selling the 2 houses we'd held for 10 years and selling right before the boom of 2002 - 2003.
Do you invest in other asset classes (shares, commodities, businesses, managed funds, cash, forex, etc)?
Apart from property, our only other investment class is direct investment in shares. I've had an interest in shares for about 20 years but didn't really do anything much until Telstra. We did ok with T1 and also with T2. Over the past 2 years we've built up a bit of a share portfolio and also 2 years ago started a self managed super fund. That's also going quite well now after a bit of a rocky start.
I like the liquidity of shares and use it as a buffer. I'm not a trader but like to look at fundamentals and hold long term, sometimes TOO long.
What criteria do you use when selecting a property to purchase?
I look for property I can add value too, whether it's doing a reno, developing or strata titling. Although I've looked into buying in Melbourne and considered SW Queensland, I'm more comfortable with my own backyard as I know it and know value here when I see it (or, at least I think I do!).
What structure do you use for your investing?
To date we've bought everything in joint names between my wife and myself. I know I should do something about a trust but haven't.
Do you feel your involvement in the industry has been a help or a hindrance to your investing?
Initially my involvement in the industry was a hindrance because I was such a know-it-all. Although history shows property has always increased, I started believing that it never would in Tassie. Hence selling when I shouldn't have.
Also, being an agent, we have to be very aware of conflict-of-interest issues. I always try and buy off other agents or private sales. The problem with that is, I'm highly unlikely to be at the top of their buyers list if a good buy comes up as they're operating in competition to me.
Thanks to reading Jan's latest book 3 years ago and also Peter Spann and more recently Michael Yardney, I've learned a whole lot more. Not to mention the discovery of Somersoft here 2 ? years ago.
If a budding property investor asked "what are the top things I should do", you would say?
Read Jan's book along with Peter Spann and Michael Yardney and as many other books as you can.
Do your research, there's always an opportunity out there. Don't be in a hurry to buy, as has been said here many times before, the opportunity of a lifetime comes around about once a week.
Get a property savvy accountant.
And if that same budding investor asked "what things should I avoid", you would say?
Avoid selling unless absolutely necessary. (The best timeframe to hold is forever - Warren Buffett)
Avoid well-meaning naysayers. I listened to them and it's been costly. Having said that, don't blindly buy anything either.
How important is planning to being a successful investor?
I was an accidental investor. Planning is something I've only learned in the past few years. If I had of planned from the beginning we'd be a long way ahead of where we are now.
Do you feel joint ventures can be a beneficial way to grow your portfolio?
Joint ventures have worked for us so far although I'd be very careful about who I go into partnership with. It would be better to do nothing than to get into a partnership with the wrong people. The ground rules and the time in the investment have to be agreed upon before you buy anything. I've only done joint ventures with a 'get in, then get out' type of deal.
Do you consider that there is any natural progression for an investor? (eg. From owning a few properties, to owning many, to being a developer)
For us, we're still building our portfolio and have moved to reno'ing and developing on a small scale to start with.
Do you have any thoughts on the CF vs CG debate or on the issue of metro vs regional, units vs houses?
My opinion is that capital growth is best but you need the cashflow to fund it so it's a mixture of both.
What do you prefer, fixed or floating interest rates and why?
I like mainly fixed rates because it gives security in knowing what my repayments are going to be for the next 5 or so years. A small percentage of variable loans is ok as those loans have a bit of flexibility.
Finally, where do you see the market at the moment and do you think the current environment is making it harder for newer investors than when you started?
I can only comment on North-West Tasmania.
We're getting a lot of interstate buyers here, especially from WA. They're coming here to get away from the heat, from the crowds and to enjoy a great lifestyle. It's also more affordable here. Mining on the West Coast is set
to boom and we're getting a lot of mainland miners coming here because the cooler climate is a lot easier to work in. That will have a large flow on effect.
These comments are only my own observations and opinions.
Comments and questions: http://www.somersoft.com/forums/showthread.php?p=292279#post292279
Last edited:
